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Income Concentration Trends and Competition in the Charitable Sector: An Analysis of Jewish Charities in England and Wales

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Abstract

Jewish charities are a subgroup of about two thousand, five hundred organizations, accounting for 1.5% of the total number of main charities in England and Wales. The increasing total income of general charities has prompted considerable debate about the perceived concentration of income and the perceived dominance of bigger charities over smaller ones. Meanwhile, the implications of competition for charitable behavior have remained underappreciated. Building on these assumptions and aiming to test how far the results of research carried out in the charitable sector in general apply to the Jewish charitable sector in particular, the research investigates the trends in concentration of income of a sample of 1301 Jewish charities operating between 1995 and 2015, using common measures of concentration to describe the competitiveness of the Jewish charitable sector in England and Wales. The findings suggest that the sector, in line with the wider UK charitable sector, experienced high levels of growth in terms of both aggregate total income and the number of charities operating, along with decreasing levels of income concentration. These findings allow one to hypothesize that, other things being constant, the increasing numbers of entrant charities may well have increased the size distribution of charities providing the same products or services, therefore exacerbating the competition for charitable funding in the Jewish charitable sector. This, in turn, on the one hand is likely to have exacerbated the competition for donations especially among charities pursuing similar causes, reducing the total amount of charitable money devoted to particular causes. On the other hand, the increasing numbers of charities providing the same products or services and the resultant increasing competition for funding may have impacted on the costs and efforts Jewish charities were able to divert to fundraising at the expense of resources that could be devoted, instead, to service provision.

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Notes

  1. “Main charities” are those charities required to prepare an annual return or update to the Charity Commission, as opposed to “linked charities” (e.g. subsidiary, group or constituent charities), which, instead, do not report their financial results as they are included within those of their main reporting charity. See Charity Commission’s website, sector overview 30/6/2016 http://apps.charitycommission.gov.uk/showcharity/registerofcharities/SectorData/SectorOverview.aspx.

  2. Pressures due to internal structural arrangements can come about because of hardly transferrable investments (e.g. plant, equipment and specialized personnel); organizational decision makers’ information constraints on activities within the organization and environmental contingencies facing the subunits; internal political constraints such as resistance to structural reorganization (Downs 1967; Zald 1970) and finally organizational history constraints which increase resistance to change in organizations. External pressures towards inertia entail instead legal and fiscal barriers to entry and exit; environmental information constraints; external legitimacy considerations and collective rationality problems (i.e. similar adaptive courses of action for similar organizations).

  3. Charities with an income below or equal to £5,000 are not mandated to register with the CC, despite being subject to its regulation in all other respects. Such charities do not appear in any official charity register. Exception is made for CIOs, which are mandated to register whatever their income. It is worth noting that before 2007 the threshold for registration with the CC was £1,000.

  4. Tesco PLC is a British global grocery and general merchandise retailer.

  5. General charities are defined in National Account terms as “private, non-profit-making bodies serving persons.” According to the National Council for Voluntary Organizations, this includes in the “general charities” definition those registered charities that meet the following criteria: formality (institutionalized to some extent), independence (separate from the state), non-profit distributing (not returning profits generated to owners or directors), self-governance, voluntarism (involving some meaningful degree of voluntary participation), and public benefit. This definition excludes registered charities that do not meet these criteria, for example sacramental religious bodies or places of worship as well as organizations like independent schools, government-controlled bodies or housing associations.

  6. The recession had a similar impact in the United States, where charitable giving declined by 6% between 2007 and 2008, but not all causes were affected equally (NCVO 2010).

  7. It is worth noticing that between 2010 and 2012, the voluntary sector held only 9% of local contracts by value and 5.6% of central contracts. Some examples are children’s homes, foster care and special education, which were run by the private sector, respectively by 67%, 46% and 34% in value over the same period (Slocock et al. 2015).

  8. During the 20th century the developments in statutory welfare reduced the Board of Guardians’ mission and in the 1990s it merged with two other Jewish charities to become Jewish Care, an organization that is the largest provider of health and social care services for the Jewish community in the UK today.

  9. This figure might overestimate the size of the sector, including both organizations not registered with the CC and with incomes equal to zero.

  10. It is worth noting that Gidron (1997), in his analysis of the Israeli non-profit, described how, in the year 1991, 12.3% of the income structure derived from contributions (grants, donations). Of those, 6.7% originated from non-Israelis (diaspora Jews).

  11. This total is slightly higher than the total originally published by ONS (263,346) due to a correction issued by ONS in February 2016. Since the correction is based on a multiplier, rounding might imply possible discrepancies in the total number of Jews in England and Wales across different publications.

  12. For an in-depth analysis of geographical changes in the UK’s Jewish population, see Graham (2013).

  13. For a detailed account of migration trends of Jews from Europe to Israel see Staetsky (2017a, b), which estimated that every year on average six hundred British Jews emigrate to Israel.

  14. This value represents the average number of children a woman would need to have to reproduce herself by bearing a daughter who survives to childbearing age. If replacement level fertility is sustained over a sufficiently long period, each generation will exactly replace itself in the absence of migration.

  15. Of those 203 charities for which detailed information was not retrievable, a total of 157 charities out of 203 (77%) had an income between £100,001-£500,000, and a total of 46 charities out of 203 (23%) had an income between £25,001 and £100,000 in 2015.

  16. This section of the register includes a trustees’ summary, which describes what the charity does as opposed to what their legal objects allow them to do. The Register of Charities in its notes for users warns that the objects set out in a charity’s governing document can sometimes be vague, general or expressed in outdated language and the way a charity takes forward its objectives may also be influenced by the resources they have available or can raise.

  17. Of those 97 excluded charities, 87, or 90%, were excluded because they did not provide charitable services in a Jewish environment or were not set up by Jews for Jews and/or the public to advance primarily the prospects of the Jewish people or the Jewish community as a whole. Among them there are charities set up to advance the Christian faith both in the UK and in Israel and charities that mentioned the word “Israel” either in their charity name, objectives or activities but had nothing to do with the Jewish faith or community. The remaining 10, or 10%, were excluded because they represented interfaith organizations that were not set up to advance primarily the prospects of the Jewish community. Nevertheless, some interfaith organizations are included.

  18. Among the biggest organizations in this group can be enumerated the Shulem B. Association Limited and The John Black Charitable Foundation. The first organization, Shulem B. Association Limited had an income of £10,997,000 in 2017–2018. Its main area of interest in the year was to establish, provide and carry on whether in the United Kingdom or elsewhere, a school or schools where pupils may obtain a sound education and to provide religious instruction and training therein in accordance with the doctrines and principals of traditional Judaism by providing grants to other organizations. The second organization, The John Black Charitable Foundation had an income of £16,937,000 in 2017–2018 and operated throughout England and Wales by providing grants to other organizations mainly seeking the advancement of health and the relief of sickness (e.g. prostate cancer and Parkinson’s disease).

  19. In detail 56% of the charities included in the panel provide grants to other organizations, among other activities. However, 30% only provide grants both to individuals and organizations and 1.51% only provide grants and other financial support.

  20. The United Kingdom public sector information website gives detailed information on charity types and on the different implications related to each of them: https://www.gov.uk/guidance/charity-types-how-to-choose-a-structure.

  21. See Staetsky and Boyd (2016) for an analysis of Jewish schools in the UK. It is worth noting that in the year 2014/2015 a total of 139 Jewish schools were operating in the UK. They include 42 mainstream schools and 97 Strictly Orthodox schools. In terms of funding, 85% of the mainstream schools were state-funded, whereas among the Strictly Orthodox only 13% of schools were state-funded.

  22. Office for National Statistics (ONS) https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/qna.

  23. As previously mentioned, charities with an income equal to £5,000 and below are not mandated to register with the CC. Thus, they have been excluded from the sample as they are unrepresentative of the population of the smallest charities in November 2016. However, the proportion of charities with an income equal to £5,000 and below accounted for 10.9% of the total in 1995.

  24. For more information on measures of inequality see Salverda et al. (2009). On their use in reference to income distributions see Atkinson and Bourguignon (2014).

  25. In 1995, the populations of the top 1%, top 5% and top 10% were 5, 24 and 47, while in 2015 they were 13, 65 and 130 respectively, each share increasing by 175% by 2015.

  26. Competitor analysis is performed by organizations in competitive environments in order to raise awareness of organizational vulnerabilities (sensitization), plan and implement necessary actions in order to meet competitive challenges (legitimation), compare organizational performance and behavior against objective external criteria (benchmarking), raise awareness of internal strengths and weaknesses by analyzing those of competitors, and finally obtaining new ideas for advertising and marketing campaigns (see Ghoshal and Westney 1991).

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Acknowledgements

I wish to thank Jonathan Boyd at JPR for his encouragement. My gratitude extends to Daniel Staetsky, David Clifford, and Margaret Harris for finding the time to read earlier versions of the manuscript and offering their advice. I also thank David Clifford for his help in merging the historical financial data. An earlier version of this paper was presented at the 11th Workshop on the challenges of managing the third sector organized by the European Institute of Advanced Studies in Management and hosted by Queens University, Belfast. I am grateful for the comments received from the other participants. Finally, the final version of this manuscript has benefited from the valuable comments of three anonymous reviewers and from the flawless coordination of the editor, Harriet Hartman.

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Correspondence to Donatella Casale Mashiah.

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Casale Mashiah, D. Income Concentration Trends and Competition in the Charitable Sector: An Analysis of Jewish Charities in England and Wales. Cont Jewry 39, 293–339 (2019). https://doi.org/10.1007/s12397-019-09278-2

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